Just before the pandemic, the New York Fed found that about 9% of people had bills that ended up in collections. Now, less than 5% do.

But what they’re spending their money on is shifting.

Households feel their finances have been improving, the New York Fed says. But Americans appear to be racking up more credit card debt.

A strong labor market also means people feel more confident they’ll be able to pay the debt back.

The University of Michigan’s consumer sentiment index is up 40% over last year, aided by moderating inflation and job market strength.

But with interest rates high and wage growth slowing, that level of spending is becoming unsustainable.

Yanely Espinal, host of Marketplace’s podcast “Financially Inclined,” tells the story of taking on a financial responsibility she wasn’t prepared for.

Different types of consumer debt saw a substantial rise in January, according to the Federal Reserve.

Card debt, which fell during the pandemic, is at a record $986 billion, according to the New York Fed. Delinquencies are rising too.

In 2022, consumer credit increased 7.8% from the year before. But in December, the growth in borrowing decelerated.